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Challenges and Opportunities for the Wealth Sector in Mexico 2013

Date: 24-Jun-2013

RnR Market Research

As of the end of 2012, there were 2,540 UHNWIs in Mexico which could be broken down into 16 billionaires, 252 centimillionaires and 2,272 affluent millionaires. Between 2007 and 2012 the number of UHNWIs in Mexico increased by 19% from 2,129 to 2,540.

In 2012, Mexican HNWI numbers rose by 15.7%, following a moderate growth of 0.4% in 2011. This strong growth in HNWI wealth and volumes is expected to continue and grow by 47% to reach 213,000 in 2017. HNWI wealth will also see a larger percentage increase, growing by 54% to reach US$1.1 trillion.

It has been estimated that, at the end of 2012, Mexican local private banking assets under management (AuM) totaled just over US$190 billion. The top five banks by local AuM are Banorte, Banamex (Citigroup), BBVA Bancomer, Santander and Scotiabank. Interestingly, the number of wealth management offices per UHNWI in Monterrey and Guadalajara is relatively low. This shows that there is scope for more wealth managers to set up business in these two cities.

Mexico’s unemployment rate stood at 5.0% at the end of 2012, compared to 4.0% at the end of 2007. Despite the increase, this is relatively healthy when compared to major markets such as the US and the EU which had respective unemployment rates of 7.5% and 12.1% in 2012. Mexico was severely impacted by the recent financial crisis with economic growth declining from 3.3% in 2007 to 1.2% in 208, and then to -6.0% in 2009.

Looking forward, Mexico’s economy has a number of underlying problems that may negatively impact its future growth. These include the fact that the oil industry remains state controlled, with foreign investment prohibited by the constitution, thus making the local industry highly uncompetitive. There is also the problem that the lack of competition in major sectors, such as telecoms, limits growth and has created a less innovative environment.

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